No limits: A farmer harvests rice in a paddy in Sakura, Chiba Prefecture, in late August. The Liberal Democratic Party-led government proposed Wednesday to abolish in 2018 the decades-old state program limiting rice cultivation | BLOOMBERG

Abe team seeks to kill rice program by 2018

Ending paddy reduction aimed at boosting competition

The Abe administration proposed Wednesday abolishing in 2018 the decades-old government program of limiting paddy usage to keep rice prices high, a landmark policy shift that would increase competition among domestic farmers.

The plan was formally unveiled during a meeting of Liberal Democratic Party lawmakers, many of whom represent rice-growing rural areas.

According to the plan, the government would start cutting subsidies next year to rice farmers who have agreed to reduce paddy usage to meet government-set goals. The subsidies would eventually disappear by 2018.

To placate lawmakers from farming constituencies, the administration has also suggested introducing new subsidies to soften the impact on rice growers.

This idea, included in the plan unveiled Wednesday, has already raised concerns that it would end up becoming just another form of pork-barrel subsidies for farmers.

About 981,000 growers currently limit their paddies to meet government goals.

The LDP-led administration of Prime Minister Shinzo Abe has set its sights a policy that will invite more competition, apparently because government controls, including numerous protective measures, have failed to prevent the rice industry from shrinking.

Japan is also facing free trade negotiations in the Trans-Pacific Partnership talks, which could eventually force Japan to get rid of its 778 percent tariff on rice.

The administration has vowed to promote consolidation of rice paddies under large-scale farms based on the theory it will make Japanese rice farming more competitive.

“(The government) has protected all farmers equally, which has prevented the (agricultural) industry from becoming (economically) independent. . . . Agriculture will decline if this situation remains unchanged,” Chief Cabinet Secretary Yoshihide Suga said in an interview in the Mainichi Shimbun published Wednesday.

The obligatory paddy-reduction program was introduced in 1971 to keep rice prices high to benefit farmers.

Until 2010, the government penalized farmers who refused requests to reduce their paddies.

Now about 26 percent of all the rice paddies across the country are owned by farmers who have refused to participate in the program, according to the agriculture ministry.

As Suga pointed out, Japanese rice farming appears to be a dying industry despite years of heavy government protection. The average age of farmers is 66 as few young people see any chance for a sizeable income from growing rice.

Domestic rice consumption has meanwhile decreased, falling to ¥1.85 trillion in value in 2011 from the peak of ¥3.9 trillion in 1984 as lifestyles become more Westernized.

Since its introduction in 1971, the paddy reduction program has cost about ¥8 trillion, according to the agricultural ministry.

In the past, powerful veteran LDP lawmakers from rural areas prevented any reform in the rice-growing industry.

But now the Abe Cabinet sees a good opportunity to promote reforms as it faces no major national elections for three years.

Many LDP lawmakers have already turned their attention to the size of the new subsidies to offset the abolition of the paddy reduction program and possible reduction of the import tariff.

“Now the discussion (among LDP members) is about subsidies in new forms. I think that’s the direction they are headed,” said Upper House LDP member Miki Watanabe, who was elected from Tokyo in July, after a meeting of LDP lawmakers to review agricultural issues on Oct. 31.

“We should set up a safety net for farmers only after hammering out policy measures to strengthen agriculture,” he argued.